Senate

Explanatory Memorandum

(Circulated by authority of the Minister representing the Treasurer, Senator the Hon. Peter Walsh)

GENERAL OUTLINE

This Bill provides for a system of information reporting based on the use of tax file numbers (TFN's) and specifies the circumstances in which TFN's are to be quoted (or, alternatively, tax withheld).

The Bill will amend:

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the Income Tax Assessment Act 1936 -

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to enable a person to apply for, and be issued with, a TFN;

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to enable persons who take up employment with an employer on or after a date to be proclaimed to quote - where they choose that option - their TFN on an employment declaration to be given to their employer;

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to enable persons who are in employment on or after 1 April 1989 (or such later date as is proclaimed) to quote - where they choose that option - their TFN on an employment declaration to be given to their employer;

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to ensure employers include their employees' TFN's on group certificates and tax stamp sheets sent to the Tax Office;

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to ensure that group certificates in respect of salary and wages will be issued to employees irrespective of whether or not tax instalment deductions have been made from the payments;

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to enable persons who enter into certain investments on or after 1 July 1991 to quote - where they choose that option - their TFN to the person with whom they have made the investment (the investment body);

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to enable persons who hold certain investments from 1 July 1991 to quote - where they choose that option - their TFN to the investment body;

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to facilitate the use of a person's TFN in respect of any legislation enacted by the Parliament concerning the funding of higher education;

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to exclude from the need to quote a TFN, certain categories of persons (e.g., certain children and pensioners);

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to require organisations to provide information reports to the Australian Taxation Office by magnetic or electronic media where that information is stored on a data processing device; and

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to increase the penalties for a breach of the secrecy provisions of the law from $5,000 or imprisonment for 12 months to $10,000 or imprisonment for 2 years.

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the Taxation Administration Act 1953 -

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to create a range of offences relating to the unauthorised use of a TFN, primarily to safeguard taxpayer confidentiality;

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to create an offence for conducting a person's affairs so as to avoid the TFN requirements;

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to increase the existing penalties for a breach by a Tax Office employee of the secrecy provisions of the law consistent with those proposed for the Income Tax Assessment Act;

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to introduce an equivalent offence to that which will apply to the disclosure of tax information by Tax Office employees to the disclosure of information obtained in unauthorised circumstances by non-employees; and

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to enable the Commissioner to be granted a Federal Court injunction against a person disclosing taxation information obtained in unauthorised circumstances.

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the Crimes (Taxation Offences) Act 1980 -

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as a consequence of amendments being made to provisions of the Income Tax Assessment Act 1936 dealing with the collection of tax in respect of certain payments.

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the Income Tax Regulations -

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to prescribe a tax deduction rate equal to the maximum marginal rate plus Medicare levy (50.25%) on employees who choose not to quote their TFN to their employer;

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to increase, from 30 per cent to the maximum marginal rate plus Medicare levy (currently 50.25 per cent), the rate of deduction from payments under the Prescribed Payments System (PPS) where a TFN has not been quoted on a PPS deduction form;

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to prescribe the rate of deduction (50.25%) to be deducted from certain investment income in respect of which a person has chosen not to quote their TFN;

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to require all investment bodies to prepare and give to the Commissioner quarterly reports of TFN quotations;

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to require investment bodies to include TFN's in annual reports of investment income paid to investors during any financial year; and

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to make a number of amendments in consequence of the amendments to be made of the Income Tax Assessment Act 1936.

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also amend the following laws to increase the existing penalties for unauthorised release of taxpayer information by employees of the Tax Office from $5,000 and/or one year's imprisonment to $10,000 and/or 2 years' imprisonment -

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Fringe Benefits Tax Assessment Act 1986;

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Gift Duty Assessment Act 1941;

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Petroleum Resource Rent Tax Assessment Act 1987;

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Sales Tax Assessment Act (No. 1) 1930;

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Sales Tax Procedure Act 1934;

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Tobacco Charges Assessment Act 1955;

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Wool Tax (Administration) Act 1964;

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Debits Tax Administration Act 1982;

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Taxation (Interest on Overpayments) Act 1983.